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Tuesday, June 13, 2006

Harvard's 'The State of the Nation’s Housing' Study is Funded by The Housing Industrial Complex

The housing boom came under increasing pressure in 2005. With interest rates rising, builders in many states responded to slower sales and larger inventories by scaling back on production. Meanwhile, the surge in energy costs hit household budgets just as higher interest rates started to crimp the spending of homeowners with adjustable mortgages.

Nevertheless, the housing sector continues to benefit from solid job and household growth, recovering rental markets, and strong home price appreciation. As long as these positive forces remain in place, the current slowdown should be moderate.

Reporting on the study, Reuters adds " Major house-price declines seldom occur without "severe" overbuilding and major job losses, or a combination of "heavy" overbuilding and modest job losses, according to the study" The Housing Bubble Blog also reports about the housing study.

HP'er Panicearly did some easy digging, and yup, Harvard's Joint Center for Housing Studies, who issued the report? Bought and sold by every major member of the corrupt REIC. Harvard is their bitch, and the report is a big wet kiss to their donors. Don't worry, masses, there is no bubble, there is no meltdown underway. Support our sponsors - Beazer, Centex, Countrywide, the corrupt Fannie Mae, etc etc etc.

It is a sad state of affairs. If the report had warned of a housing bubble would the Joint Center for Housing Studies still get as much funding from the housing industrial complex? Doubtful.

67 comments:

It's a shame that such a relevant, important fact (that this outfit is funded by the housing industry) is really only available on the internet, and not prominently underlined in every media article that covers these jokers.

Baltimore Houing Blog That report is a joke. Academia should not be a cover for industry to hawk their wares. If a pharmaceutical company funded an academic study that reported their drug X to be harmless, yet people died as a direct result of taking said drug X, and more got sick every day, why would you believe it? What if htey said, well, all the past drugs we've put out were fine, so if you compare, this one will be fine as well, there's no evidence of danger.

Academic researchers at many institutions are required to include a conflict of interest statement when they submit for publication. There is a reason for this--any study backed by those with a vested financial interest in the results will more often than not get what they pay for, which is a pre-determined conclusion. This type of research fraud is more prevalent than institutions care to admit, but it really astonishes me that no MSM have yet picked up on the obvious conflicts here. Pathetic.

This is a ridiculous post. Are you really saying that Harvard's study is a fraud because the center receives money from the big bad "housing industrial complex"? Because if it comes down to the credibility of a Harvard study or some random guy with an anonymous blog, I don't think it's much of a fight in terms of credibility.

You completely ignore the entire 44 page report. You focus only on two paragraphs in the executive summary, cite approvingly from another blogger, and then insinuate that the people who put out this report are simply putting out what the big bad housing industrial complex wants the public to read. That is pretty intellectually dishonest, or at the very least, lazy.

If you're going to impugn the reputations of the people at the center, then you sure better have something more than two quotes and a link to another blogger.

I know you wouldn't attack the messenger without addressing the substance of the argument.

Right. "Research" is never skewed to favor the folks who paid for it. That's why epidemiology studies sponsored by the American Tobacco Institute are universally acknowledged to be the world's best.-- sglover

No, I was talking about NOT attacking the messanger. You misunderstood.

"Right. "Research" is never skewed to favor the folks who paid for it. That's why epidemiology studies sponsored by the American Tobacco Institute are universally acknowledged to be the world's best.-- sglover "

"Are you really saying that Harvard's study is a fraud because the center receives money from the big bad "housing industrial complex"?"

No. I'm not saying the study is fraud.

What I am saying is that even if the researchers believed that housing would experience significant price declines it is doubtful they would report this because much of their funding sources might be yanked.

Dave-Quote please? What are you talking about? Is character assasination all you have to contribute, or is there a retort in there? I claim no greater credibility than anyone else, I'm just a girl who blogs and shares her opinion, and i happen to have firsthand knowledge of academic research and publishing. But glad to see I caught your attention.

Wow, calling out Harvard for their lack of disclosure sure ruffled some feathers! Funding is funding, and the source does matter, despite what you'd like to believe. David is absolutely right, they would lose a significant portion of their "advisor board" and with it millions of $ if they don't publish what their backers want to read. It's not that hard to see the conflict of interest here. It would be nice to have an articulate discussion about this, but that's a pipe dream here.

You're playing semantics games again. Your saying that the report would not have painted a gloomy outlook on housing because there's no way the report's "housing industrial complex" masters would have ever tolerated such a report.

So the insinuation is that because this report painted a non-bubblehead view of the housing market, then the only reason it did so was because that's what it's "housing industrial complex" corporate sponsors wanted.

In other words, it's an academic fraud because it only reports what the supposed sponsors want it to report. And that's exactly what the Housing Panic blurb that you approvingly quote from is saying.

So it's pretty dishonest to say that even though you're quoting someone who says the paper is a fraud, and even though you don't think the paper would have been published had it not said what the "housing industrial complex" wanted it to say, that you're not REALLY saying it's a fraud.

I note also that you don't dispute the charge that you have not read the full report. Have you read the full report? Or are you making your accusation solely on the basis of skimming the executive summary and then relying on other bloggers?

It is perfectly reasonable to question a study of market conditions paid for by those whose vested interest is to sell things into the market at hand. In this case, houses. As H.L. Mencken famously said, "follow the money."

Anyway, college professors always start writing scholarly accounts of why "it's different this time" at the peak of every bubble. Never fails.

It's all about credibility Harvard vs. Joe Blogger. If you want to boast your credibility read the report and evaluate how well the report support's the claim "Nevertheless, the housing sector continues to benefit from solid job and household growth, recovering rental markets, and strong home price appreciation. As long as these positive forces remain in place, the current slowdown should be moderate." If whatever facts they presented to support the claim is weak put it in another post along with your own statements why these facts are insufficient. Doing this should boast your credibility.

She did, to which I replied that she should pull her money out of her bank, because the bank is no doubt lending it to people so they can buy homes. Thus she is part of the homeownership "scam". She didn't reply to my comment here.

Really, everone here needs to look into whether or not their bank or a subsidiary issues mortgages. Your bank might be lending your money in the form of mortgages. (Think of the financial problem in the movie "Its a Wonderful Life")

If you look on page 2 of the Harvard report, you will find out who provided funding for the report.

"Principal funding for this report was provided by the Ford Foundation and the Policy Advisory Board of the Joint Center for Housing Studies. Additional support provided by: Fannie Mae, Freddie Mac, Federal Home Loan Banks, Housing Assistance Council, National Association of Affordable Housing Lenders, National Association of Home Builders, National Association of Housing and Redevelopment Officials, National Association of Local Housing Finance Agencies, National Association of Realtors, National Council of State HOusing Agencies, National Housing Conference, National Housing Endowment, National League of Cities, National Low Incone Housing Coalition, National Multi Housing Council, Research Institute for Housing America."

Kind of hard to argue that it takes much digging to find out who helped pay for the report.

Unless you mean it takes too much effort to actually open the PDF and flip to page 2.

Go to page 17 and add up how much of the money lent from 2003 to 2005 were nontraditional loans. Over 2/3s as I count it. IMO it is the fundamental thing that led to the runup in addition to low rates. Take away the low rates and your set for a fall. The report just glances over the topic and actually has the nerve to call these loans "innovative". they are either in denial, trying to hide something or delusional.

Bernanke's rate hikes (I think the next one will be 50 BPS) are the turd in the punchbowl for this party.

You mean the report actually mentions things like ARMs, IOs, and options mortgages? And it also mentions the risks of what higher interest rates on those loans means for borrowers on pages 16, 17 & 19?

But, but, but...How did the housing industrial complex allow such information into this report?

It is a crying shame Professor Galbraith of Harvard could not have lived just a few more weeks, for on his short list of symptoms of financial mania is the claim of "financial innovation." He explained, with far more eloquence than DC_Too can match (or can any anonymous real estate agent, for that matter), that finance does not lend itself to innovation.

There are only two kinds of money in this world, yours and somebody else's. If you spend the latter, and the party to whom it belonged has an expectation of repayment, that is called a "loan." It matters not the terms of repayment, though the cheerleaders, in today's mania, the real estate industry, will point to "innovation" that leads to the extension of loans that may never be paid back. "Genius is before the fall." Isn't that what he said?

“….If you look on page 2 of the Harvard report, you will find out who provided funding for the report.

"Principal funding for this report was provided by the Ford Foundation and the Policy Advisory Board of the Joint Center for Housing Studies. Additional support provided by: Fannie Mae, Freddie Mac, Federal Home Loan Banks, Housing Assistance Council, National Association of Affordable Housing Lenders, National Association of Home Builders, National Association of Housing and Redevelopment Officials, National Association of Local Housing Finance Agencies, National Association of Realtors, National Council of State HOusing Agencies, National Housing Conference, National Housing Endowment, National League of Cities, National Low Incone Housing Coalition, National Multi Housing Council, Research Institute for Housing America."

A nutritionist I visited gave me a report that stated that sugar is not harmful, does not affect children, that if they are hyper, it is due to the association of sweets with celebration, not the sugar itself.

I immediately said "who wrote that, the sugar industry"?

She smiled and said yes, that was the point she was trying to make in showing me the article--one must always consider the source.

A) I can read. I can also apparently read better than HP'er Panicearly since as you can see from the list above, Beazer, Centex and Countrywide do not appear as sponsors.

B) I wish I got paid to post. Alas, I only post in order to avoid work.

C) No. But that does seem to be the usual attack against anyone who doesn't drink the bubblehead KoolAid.

D) Neat bolding trick. How come you didn't bold groups like the National League of Cities, the Housing Assistance Council and the National Low Income Housing Coalition? Are they also part of the "housing industrial complex"?

Finally, your tone is rather obnoxious. You're not going to win any converts that way.

If anyone is winning converts for the “bubble heads” it’s you “fritz”.

“….How come you didn't bold groups like the National League of Cities, the Housing Assistance Council and the National Low Income Housing Coalition? Are they also part of the "housing industrial complex"?......

Because what I did bold required little thought. As first glance you can tell that the “results” could possibly be skewed

Can you honestly say at first glance that anything Fannie Mae has to do with can be considered legit? For pete’s sakes, they cooked the books during a record housing boom. . I mean come on, you want to buy some Enron stock?

ok, so I have a contract on a house in Vienna for approx $950K. The sales price is under the tax assessed value and well under Zillow's zestimate. What do you think it will be worth in 1 or 2 years? Thanks.

I look at the link that ihateyuppies metionedhttp://money.cnn.com/2006/06/12/real_estate/overvaluation_even_worse/index.htm

In quotes are excerpts of the article followed by some bashing.

"Booming household growth. The nation will add 1.37 million new households this year. Part of this is natural population increase but this has also been bolstered by foreign migrants."

How many foreign migrants can afford a house? How many new households can afford houses, chances are they have hugh college debt? Show me percentage of "new households" that can afford houses Mr. HARVARD researcher.

"Graying boomers. As boomers have aged and prospered, they have begun to buy vacation or second homes in increasing numbers. This trend will widen as they near retirement."

What percentage of retires can afford second houses? I personally know it's a stretch to say that 10% of retire can make it on their retirement, most retired people will encounter a more modest lifestyle then during their working years.

Changing household composition. Social and cultural changes add to the number of households. There are more single-person households than in the past. Fewer adult children live with their parents; they establish their own homes. Increases in divorce rates result in the division of multi-person households into smaller ones. Family sizes have shrunk; a community may have about the same population but more households.

Children have moved out of their parents houses by there mid 20s as long as I can remember and this is going back to the 80s. No upward trend here. How many divorce spouses can afford houses on their own?

Minority gains. Ownership among formerly under-represented minorities has increased. Black and Latin home ownership has always trailed that of whites but the past 10 years has seen minorities making great progress.

This one actually makes sense. I'm glad to hear more minorities are achieving the American dream.

These statements look more like some middle school student essay than some Harvard researcher.

"How many foreign migrants can afford a house? How many new households can afford houses, chances are they have hugh college debt? Show me percentage of "new households" that can afford houses Mr. HARVARD researcher."

I'm not sure why the questioning of whether foreigners can ever save up enough to buy homes. Of course they can! Will it be a nice townhouse in Georgetown? Nope. But could it be a townhouse in Manassas, Hagerstown or other far-out exurbs? Absolutely. And there is pretty good evidence of this based on transportation patters for the lowest skilled workers in the DC area.

Same thing for new households. Your assumption is that these households have tremendous college debt and won't ever be able to afford a home. But this isn't correct. Yes some do have $100k college debt. But most do not. And once again, new households won't be able to buy a nice Georgetown or Kalorama home. But if they save enough for a down payment and know how to manage their finances, they can indeed purchase a home in the outer suburbs.

"What percentage of retires can afford second houses? I personally know it's a stretch to say that 10% of retire can make it on their retirement, most retired people will encounter a more modest lifestyle then during their working years."

I don't know what percentage of retirees can afford second homes. Based on the lack of any citations, neither can you. Perhaps 10% is too high a guess; maybe it's just right. I don't know. But this is a good area for further academic research.

"Children have moved out of their parents houses by there mid 20s as long as I can remember and this is going back to the 80s. No upward trend here. How many divorce spouses can afford houses on their own?"

Actually, based on both news reports and anecdotal evidence, more kids do seem to be moving back in with their parents after college graduation, working crappy entry-level jobs, and saving money. Once again, this is an area that needs more academic research because of its sociological and economics impacts.

"This one actually makes sense. I'm glad to hear more minorities are achieving the American dream."

You are right most college grads don't have 100K debt and can save for a starter house in an area less oppulent than Georgetown. I still argue there is a downward trend of recent college grads buying houses. Also I argue that there is (or will be) an upward trend in ages for 1st time home buyers.

Foreigners buy houses in "exburbs" like Hagerstown. At minimum or low wages? What percentage of foreigners can do this?

I'm glad you brought info about a trend that more college grads are moving in with there parents. This sucks!

Speaking of crash and burn, anybody been paying attention to gold lately? Next stop $500, then watch it fall like a set of car keys out the window from the 87th floor.

Clearly gold had become disconnected from fundamentals and is in the process of reverting to the mean, as all asset classes must. What goes up must come down. Don't catch a falling knife or fall for a dead cat bounce.

Before we even get to the content, it is very relevant who funded it. Denying that is ludicrous. Before any discussion of this report in a newspaper article, there should be a line that says something like "in a study funded by housing lenders, sellers, and developers" so that we can all consider the source.

NO MATTER what the report says, my paragraph above is true. Then, to evaluate the report, you do need to read it. But like I said, before you read it, or read about its conclusions in a newspaper article, you should be informed as to who paid for it.

I'm not bashing it. Although the knee-jerk response was to bash it without even reading it (as David acknowledges he did), I prefer actually reading it first and then discussing it.

Is the report the end-all and be-all of the discussion? Not at all. Parts of it seem supported by evidence (a concept many bubblehead disciples don't seem to understand) and other parts of it are stretches.

"You are right most college grads don't have 100K debt and can save for a starter house in an area less oppulent than Georgetown. I still argue there is a downward trend of recent college grads buying houses. Also I argue that there is (or will be) an upward trend in ages for 1st time home buyers."

I don't know how we could prove this either way. As far as I know, there isn't any recent studies looking into this. Anecdotally, I do know a good number of recent college and law school grads who bought homes within a year of graduation, but in almost all the cases, it was in non-hot markets (e.g., Ohio, Michigan, upstate NY). I also know another sizeable number that is either renting or living with their folks for a while. So other than anecodtes, I don't know how we prove one point of view versus the other.

"Foreigners buy houses in "exburbs" like Hagerstown. At minimum or low wages? What percentage of foreigners can do this?"

Yes! Take a trip through Manassas or Dale City or Fredricksberg or other far-out DC exurbs in MD and VA. You will find very large numbers of Hispanic and other recent immigrants with little if any professional skills. And many have saved up their low wages to purchase a home. Have you ever noticed any group homes full of immigrant workers? They live packed like sardines and save their money. Some send their money back home to their families; others save their money and buy their own place so that their relatives can join them. It absolutely is possible to own a home even on low wages. The home won't be conveniently located, nor will it be anything more than a starter home. But it will be home of their own, nonetheless. And that kind of pride is a heck of an incentive to save each penny.

Sorry to burst your bubble on the "recent immigrants are good at saving money to buy homes, therefore they are to be praised" thing, but I would argue otherwise. Yes, from what I've seen, these are people who have nearly NO cash to save, but still save some. However, they usually need to take more than one loan, and pool resources with many other relatives to buy a single fugly little townhouse in the worst areas of Germantown, or "Anapolis"....They might have more discipline than your average college grad or current grad student (including myself, I must confess....and BTW, I'm also an immigrant...though been living here for about 1 decade) when it comes to saving, but they are still in deep trouble thanks to "exotic" lending packages by mortgage peddlers. Many of these people (from what I've seen) have taken ARMS, balloons, etc. Ouch!! Feel sorry that they bought overpriced holes in the wall, which they will not be able to afford in a couple of years. These immigrants are probably the most vulnerable to rate increses. I don't blame them fully, but they will have some blame in their future financial ruin. They shouldn't have bought into the used-car salesmen tactics the RE industry uses: "it's now or never!! Get your american dream now!"....Well, the american dream won't last long. They are just as doomed as Jurgis from The Jungle, imho.

Bubble heads will rule in 2008/2009. By then the final Desperate bitter-enders from the housing boom will flushed down the toilet along with their ARMs. Savvy bubble heads will swoop in and buy the foreclosed homes of once proud housing heads at 1999 prices. The broken housing bulls will roam the streets as homeless and sad empty shells of their former selves.

I read the report. The big problem with the report is that it is based on the old data thus it is not relevant for current enviroment. Also I was unable to find what they think how big is the influence of "investment" (flippers) on the future housing prospects. Useless report.

I think it gets even worse. For two mornings in a row (13th and 14th of June) I have seen a link to a news article that cites the report and talks about the soft landing and no crash. The report was out on the 13th and the Yahoo front page news link was only there in the AM. Why did it reappear on the morning of the 14th on the same Yahoo front page news section?

My opinion is that Yahoo is probably selling the link space to the article. If that is true, then who is paying? My bet is the NAR or HBs. This is the article that keeps showing up.

I had to go deep into Yahoo to find the link. man O man, in the housing section there are some pretty bearish headlines today. One I found interesting is that the mtg activity is fast this week because everyone thinks the rates will be raised on the 29th. Last spurt?

NAR doesn't realize that things are different in DC. Prices might drop in the U.S. but now here -- they never drop in DC and it's because of the new real estate paradigm, rising rents, and the fact that the US government is hiring like crazy.

BILL, STOP POSTING IN MY NAME ... YOU ARE MAKING AN ASS OF YOURSELF. AND PLEASE DON'T THINK THAT IT'S NOT POSSIBLE TO TRACE YOU. IT IS ... YOU'RE JUST NOT WORTH MY TIME AT THIS POINT ... BUT KEEP IT UP AND THAT COULD CHANGE ... NOTHING IS ANONYMOUS ON THE INTERNET ... NOTHING ... WHICH IS WHY I, UNLIKE YOU, POST IN MY OWN NAME A-HOLE.

PRICES NEVER COME DOWN IN DC; GOVERNMENT IN DC SPENDS MONEY; GOVERNMENT IN DC IS HIRING PEOPLE; LOTS OF CONTRACTORS IN DC; NEW HOUSING PARADIGM IN DC; LIMITED LAND SUPPLY; EVIL LANDLORDS WANT TO RAISE YOUR RENT FIVE FOLD EVERY YEAR OR KICK YOU OUT OF YOUR APARTMENT; OTHER HOUSING MARKETS IN U.S. WILL COME DOWN -- NOT DC'S; RENTS GO UP EVERY YEAR; RENTERS HAVE LOW SELF-ESTEEM; I LIKE TO WRITE IN ALL CAPS WHEN I MAKE THREATENIONG COMMENTS; NEW HOUSING PARADIGM IN DC. [SOUND OF BRAYING ASS...]